Can I Buy a Home with a Friend or Group? - Paris Group Realty, LLC Portland OR
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Can I Buy a Home with a Friend or Group?

Navigating Joint Homeownership: Benefits, Risks, and Planning for the Unexpected

As real estate prices have risen over the last decade, it’s becoming more and more common to invest in real estate with other people besides your partner. In a recent episode of “Dear Claire”, we discussed what you need to know about buying a house with a friend or group of people. Here’s a breakdown of what we talked about:

1. When you apply for a mortgage with a friend or group, the lender will base your cumulative qualification on the WORST portions of each person’s financial history. In other words, the lender will combine the person with the lowest credit score, the person with the lowest income, and the person with the highest debt-to-income ratio in their calculations. This is because they want to see the highest risk potential possible when determining your pre-qualification.

2. That being said, there are definite benefits to purchasing with others rather than individually. As opposed to purchasing a home alone, purchasing a home with a friend will most likely give you a larger down payment and more purchasing power (you’ll be able to purchase a larger or nicer home with others than you could alone).

3. Come up with an exit strategy should something go wrong. Make sure you’ve had in-depth discussion with everyone involved in the home purchase about what will happen if someone passes away, if a couple breaks up, or if a friendship is severed at some point in the future. This may involve a legal agreement with a clause stipulating how to dispose of the home and divide the profits among the group of people who own it, should something go awry at any point during your mortgage term.

So yes, you can buy a home with a friend or group, and there are definite benefits … just be sure you have all the facts and plan an exit strategy in case you need it!

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